Does 7 Brew have the right to retain and use revenue received from suppliers without restriction?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
We and/or our affiliates have the right to derive revenue—in the form of promotional allowances, volume discounts, commissions, other discounts, performance payments, signing bonuses, rebates, marketing and advertising allowances, free products, and other economic benefits and payments—from suppliers that we designate, approve, or recommend for some or all 7 BREW Stores on account of those suppliers' prospective or actual dealings with your Store and other 7 BREW Stores (including affiliate-owned 7 BREW Stores). That revenue may or may not be related to services that we and our affiliates perform. All amounts received from suppliers, whether or not based on your or other franchisees' purchases from those suppliers, will be our and our affiliates' exclusive property, which we and our affiliates have the right to retain and use without restriction for any purposes we and our affiliates deem appropriate. Any products or services that we or our affiliates sell you directly may be sold to you at prices exceeding our and their costs.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–32)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew and its affiliates have the right to derive revenue from suppliers that they designate, approve, or recommend to 7 Brew stores. This revenue can come in various forms such as promotional allowances, volume discounts, commissions, rebates, and other economic benefits.
The FDD states that all amounts received from suppliers, regardless of whether they are based on a franchisee's purchases, are the exclusive property of 7 Brew and its affiliates. They have the right to retain and use this revenue without any restrictions for any purposes they deem appropriate. This means that 7 Brew is not obligated to share any of this revenue with franchisees, even if the revenue is generated from the franchisee's store purchases.
This arrangement is common in franchising, where franchisors often negotiate with suppliers on behalf of the entire system and receive benefits for doing so. However, it's important for prospective franchisees to understand that they may not directly benefit from these arrangements. The FDD also mentions that products or services sold directly to franchisees by 7 Brew or its affiliates may be priced higher than their costs.
This revenue arrangement allows 7 Brew to potentially increase its profitability through supply chain management. While this is a benefit for the franchisor, prospective franchisees should consider how this arrangement might affect their own costs and profitability. It is advisable to discuss with 7 Brew how these supplier arrangements are managed and how they benefit the overall franchise system.